Displaying items by tag: LafargeHolcim
Austria: A TEC are working on plans to increase kiln output with coarse and lower calorific fuel at the LafargeHolcim Mannersdorf cement plant. The intention is to increase the alternative fuels substitution rate to 100%. Other work being conducted includes lowering emissions and reducing pressure drop in the preheater tower. A higher separation efficiency of the top stage cyclones will also be achieved with increased production capacity.
A TEC will lead on the project as an engineering, procurement and construction (EPC) contractor. The execution of the project will be performed in collaboration with the Czech company Aliacem s.r.o. Přerov. Erection works will start in September 2016 and the whole project will be finished in March 2017.
Lafarge Africa approves acquisition of UNICEM
16 May 2016Nigeria: The board of directors of Lafarge Africa has approved the acquisition of an additional 50% equity interest in the Untied Cement Company of Nigeria (UNICEM). The purchase was handled on the same terms of its initial acquisition of 35%. Following the acquisition Lafarge Africa will own an indirect interest of 100% in UNICEM.
The 50% share is currently held by Egyptian Cement Holdings, a company jointly owned by LafargeHolcim and Lafarge Africa. LafargeHolcim owns Egyptian Cement Holdings via Holcibel. Lafarge Africa is buying its latest purchase of shares from Holcibel.
Switzerland: LafargeHolcim’s net sales have fallen by 5.5% year-on-year to Euro6.06bn in the first quarter of 2016 from Euro6.41bn in the same period in 2015. Its sales volumes of cement rose slightly by 1.4% to 56.6Mt from 55.8Mt. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 15.6% to Euro774m. It blamed the fall in sales on ‘challenging conditions’ in Nigeria, Brazil and India.
By region the cement producer reported that sales volumes of cement in Asia Pacific rose by 6.6% to 30.1Mt supported by a stabilisation of the Chinese economy with growth in March 2016. However, its sales revenue was affected by low prices. In Europe cement sales fell by 3.1% to 7.7Mt due to slowing construction growth in the UK despite improvements in France and Switzerland. In Latin America cement sales fell by 10.7% to 6Mt mainly due to problems in Brazil. In the group’s Middle East Africa region cement sales rose by 3.1% to 10.8Mt led by Algeria, Egypt and Nigeria. Finally, in North America sales of cement grew by 18.9% to 3.4Mt boosted by a ‘vigorous’ housing market.
“The first quarter is not indicative of our full year performance. We are on track with our plan and we see favourable underlying trends,” said chief executive officer Eric Olsen in a statement. The multinational construction materials producer intends to keep to its 2018 targets announced in November 2015. It will do this through holding down costs, continuing its Euro3.16bn divestment programme and increasing benefit from synergies following the merger of Lafarge and Holcim in 2015.
Nigeria: AshakaCem, a subsidiary of Lafarge Africa and member of the LafargeHolcim group, has appointed Alhaji Rabiu Abdullahi Umar as its new managing director. AshakaCem said in a statement that Umar was appointed to succeed Leonard Palka, a Polish national, who has resigned from the company.
AshakaCem in Gombe State is one of the four cement companies controlled by Lafarge Africa in Nigeria. Formerly the companies were known as Lafarge Cement WAPCO Nigeria before the name was changed in 2014.
India: On 9 May 2016 Dalmia Cement withdrew their challenge to a conditional approval given by India’s anti-trust regulator to the proposed merger of Lafarge and Holcim in india. The Competition Appellate Tribunal (CAT) has accepted Dalmia’s decision, paving the way for the sale of Lafarge India’s 11Mt/yr of cement capacity as a part of the merger conditions.
A statement from LafargeHolcim stated, “We are happy Dalmia has withdrawn their appeal to the CAT and look forward to completing the sale of Lafarge India.”
South Korea: Baring Private Equity Asia and Glenwood Private Equity have completed their acquisition of Lafarge Halla Cement from LafargeHolcim. The company will be rebranded as Halla Cement.
“The Baring Asia team impressed us with its knowledge and experience within the cement industry, and we have confidence in their ability to support our growth in the future. The industry in Korea is seeing a period of strong demand and we expect that to continue in the medium- to long-term, so we are looking forward to capitalising on this as an independent company,” said Jong Goo Moon, CEO of Halla Cement.
Halla Cement operates one 7.6Mt/yr integrated cement plant with four kilns. It runs two slag grinding plants located in Gwangyang, Jeonnam and Pohang, KyongSang with a capacity of 0.8Mt/yr and 1.5Mt/yr respectively. It also operates 10 distribution centres in the country. The company employs around 500 workers.
Philippines: Holcim Philippines’ profit was flat year-on-year in the first quarter of 2016 at US$31.7m, despite revenues increasing by 17% to US$213.6m. The company reported, however, that production costs rose by 23%, eating into revenues.
Holcim Philippines president and country chief executive Eduardo Sahagun said that the company’s first-quarter performance was due to its ability to make supply available in the market on time and its strong regional presence.
“Moving forward, we are cautiously optimistic as we await the results of the coming elections. Hopefully, the focus on infrastructure remains, as this is much needed by the country to sustain its development,” Sahagun said.
Cement demand in the Philippines grew 12% in the first quarter of 2016, on sustained rollout of private sector projects and higher state spending for infrastructure.
Cement company CEO pay
04 May 2016In April 2016 the shareholders of BP voted against a pay package of US$20m for the company's chief executive officer (CEO) Bob Dudley. The vote was non-binding to BP but it clearly sent a message to the management. Subsequently, the chairman Carl-Henric Svanberg acknowledged the mood amongst the company's investors and stated in his speech at the annual general meeting that, "We hear you. We will sit down with our largest shareholders to make sure we understand their concerns and return to seek your support for a renewed policy."
The link to the cement industry here is that many of the world's major cement producers are public companies. Similar to BP they internally set CEO and leading executive pay and remuneration packages. Just like BP, cement companies too could run into similar complaints from their shareholders, for example, should the construction and cement markets have similar jolts that the oil industry has faced since mid-2014.
To be clear: this article is not attempting to pass judgement on how much these CEOs are being compensated. It is merely seeing how compensation compares amongst a selection of leading cement companies. LafargeHolcim's revenue in 2015 was greater than the gross domestic product of over 90 countries. Running companies of this size is a demanding job. What is interesting here is how it compares and what happens when it is perceived to have grown too high, as in the case of BP.
It should also be noted that this is an extremely rough comparison of the way CEO pay and wage bills for large companies are presented. For example, the CEO total salary includes incentives, shares and pension payments. The staff wage bills includes pension payments, social charges and suchlike.
Graph 1: Comparison of CEO total remuneration from selected cement companies in 2015. Source: Company annual reports.
There isn't a great deal to comment here except that compared to the average wage these are high from a rank-and-file worker perspective! The total salary for Eric Olsen, the CEO of LafargeHolcim, is lower than HeidelbergCement and Italcementi, which seems odd given that LafargeHolcim is the bigger company. However, Olsen has only been in-post since mid-2015. By contrast, Bernd Scheifele became the chairman of the managing board of HeidelbergCement in 2005. Carlo Pesenti, CEO of Italcementi and part of the controlling family, took over in 2004. Albert Manifold, CEO of CRH, also sticks out with a relatively (!) low salary given the high revenue of the company.
Graph 2: Comparison of CEO remuneration to average staff cost and total company revenue in 2015. Source: Company annual reports.
This starts to become more interesting. HeidelbergCement's higher CEO/staff and CEO/revenue ratios might be explained by Scheifele's longer tenure. Yet Italcementi definitely sticks out with a much higher CEO wage compared to both the average staff wage and the company's revenue. Again, CRH stands out with a much lower CEO/staff ratio. Dangote's CEO/staff ratio is low but its CEO/revenue ratio is in line with the other companies' figures.
Consider the figures for China Resources and this suggests that CEO/revenue ratio may be more important than the CEO/staff ratio. The implication being that the market will only tolerate a ratio of up to about 0.05%. Any higher and the CEO's family has to own the company. Which, of course, is the case with Carlo Pesenti and Italcementi. Until HeidelbergCement takes over later in 2016 that is.
That’s as far as this rough little study of CEO remuneration at cement companies will go. So, next time anybody reading this article from a cement company asks for a pay rise, consider how much your CEO is receiving.
Kenya: Central Bank of Kenya (CBK) deputy governor Sheila M’Mbijiwe is seeking re-election to the board of LafargeHolcim majority-owned Bamburi Cement. A notice sent to shareholders stated that the CBK senior executive will be seeking a new mandate when the company holds its 65th annual general meeting on 2 June 2016 in Mombasa. The 58-year-old senior CBK executive, who also sits on the regulator’s Monetary Policy Committee, was set to retire by rotation but is seeking to retain the seat.
Others seeking re-election are Daniel Patterson and D Drouet who are also retiring by rotation but are eligible to seek to be elected again.
Vietnam: LafargeHolcim is considering leaving Vietnam due to oversupply of cement in the local market, according to Nguyen Cong Bao, general director of Holcim Vietnam. The company met with the Ministry of Construction to notify it of its forthcoming business plans in Vietnam. Bao’s statement was reported by the Dau Tu newspaper.
The cement producer has five cement plants with a production capacity of 6Mt/yr, making it the largest manufacturer in the country. It also operates eight ready-mixed concrete plants. The Vietnam Cement Industry Corporation (Vicem), the country’s leading cement producer, holds a 35% stake in Holcim Vietnam. LafargeHolcim retains the brands of Lafarge and Holcim’s products including Lavilla (Lafarge) and Holcim Power-S. Holcim Vietnam holds 26% of the domestic market and Lafarge Vietnam holds 12% of the market.